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Friday, June 12, 2015

Using Smart Home Technologies to Build a Smarter Grid

By Amelia Schlusser, Staff Attorney

Summer has arrived in the United States, and rising
temperatures are causing electricity demand to rise across the nation. U.S.
electricity demand typically peaks during the summer months, as homes and
businesses rely on energy-intensive air conditioning units to combat rising
temperatures.This increase in energy
demand creates challenges for electricity providers, which often must rely on
expensive and inefficient “peaking” plants—typically fueled by natural gas—to
provide sufficient power to satisfy consumer energy needs.

Electricity
users can help to offset the need for back-up peaking power by reducing the
amount of energy they consume. However, many consumers may be unable or
unwilling to voluntarily reduce consumption during peak demand periods. To motivate
consumers to reduce their energy demand during these periods, many utilities
are deploying smart grid technologies as components of their demand response
programs. Demand response programs encourage electricity consumers to shift or
reduce their energy consumption during peak demand periods. Smart grid
technologies facilitate demand response by providing consumers with real-time
information on their electricity rates and usage, or allowing utilities to
directly control certain types of customer load during peak demand periods.
Demand response programs and related smart grid investments can reduce
electricity rates for participating consumers, and they have the potential to
lower costs for all ratepayers by reducing the need for additional peaking
generating units that only operate during periods of high demand.

In Illinois, Commonwealth Edison (ComEd) recently announced
the launch of an innovative demand response program in partnership with Nest
Labs and Comcast’s Xfinity Home program. Under the new program, ComEd is
offering customers up to $40 to use connected “smart” thermostats that enable
the utility to remotely adjust customers’ thermostat settings during peak
demand periods. To participate in the program, customers must first enroll in
Nest’s Rush
Hour Rewards or Xfinity Home’s Summer Energy Management Program. Xfinity
customers are also eligible to receive a free Xfinity Home thermostat when they
enroll in the ComEd program.

According
to Utility Dive, the program presents a simpler, less
expensive opportunity to increase demand response from ComEd’s customers. While
the program is a bit less reliable than demand response programs that give
utilities direct control over customer appliances, it requires far less
participation from ComEd itself, which results in cost savings for the utility
and its ratepayers. The utility doesn’t have to install or operate any extra
equipment in participants’ homes, and Nest and Comcast are helping to market
the program to customers.

Given the recent proliferation of smart home and smart grid
technologies, the partnership between a utility, an internet provider, and a
“smart” product manufacturer feels like a logical progression for our evolving
electricity sector. These types of corporate relationships should help grid
operators integrate renewable energy resources onto the grid, by enabling
utilities to balance variable renewable output through adjustments in customer energy
use. ComEd’s program relies on smart thermostats, but given the current rate of
deployment of “smart” home products, future demand response programs could
enable utilities to control other energy-hungry appliances, such as refrigerators,
dishwashers, and hot water heaters. To help build a smarter grid, utilities
should follow ComEd’s lead and integrate smart home technologies into their
demand response programs.